The Privacy Law Site

Wednesday, November 08, 2006

FTC Settles Spyware Case For $3 Million

Zango, a creator of pop-up online ads, has agreed to settle an "unfair and deceptive practices" case with the Federal Trade Commission and pay a $3 million fine.

The FTC alleged that the company, formerly known as 180Solutions, placed software enabling pop-up ads on the hard drives of users, who were accessing free software for games or screensavers, without their knowledge. The FTC also argued that the company made it difficult to get rid of the software.

"Consumers' computers belong to them, and they shouldn't have to accept any content they don’t want. If consumers choose to receive pop-up ads, so be it. But it violates federal law to secretly install software that forces consumers to get pop-ups that disrupt their computer use," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection.

The settlement agreement also requires the company to"give clear and prominent disclosures and obtain consumers’ express consent before downloading software onto consumers’ computers." Consent must be more explicit than a click through or EULA.

The FTC argued that the company downloaded the adware onto 70 million computers and caused 6.9 billion ads to pop-up.

"This is a landmark settlement, and one that sends an important message to companies that have built their businesses on the backs of internet users without any concern for what those users want. With this action, the FTC has again made clear that it is prepared to go after companies, regardless of size or market position, that engage in unfair and deceptive practices to distribute their products," said Ari Schwartz Deputy director of the Center for Democracy & Technology.